NGL Energy Partners LP (NYSE:NGL) (“NGL,” “our,” “we,” or the “Partnership”) today reported its second quarter Fiscal 2024 financial results. Highlights include:
- Net income for the second quarter of Fiscal 2024 of $28.3 million, compared to net income of $3.6 million for the second quarter of Fiscal 2023
- Adjusted EBITDA(1) for the second quarter of Fiscal 2024 of $176.2 million, compared to $142.2 million for the second quarter of Fiscal 2023
- Produced water volumes processed of approximately 2.44 million barrels per day during the second quarter of Fiscal 2024, growing 7.7% from the second quarter of Fiscal 2023. Including minimum volume commitment payments, the Partnership received revenue on an additional 20.8 million barrels in the second quarter of Fiscal 2024
- Record Water Solutions’ quarterly Adjusted EBITDA(1) of $140.4 million for the second quarter of Fiscal 2024, a 34.0% increase compared to the second quarter of Fiscal 2023
- Total leverage at the end of the quarter was 4.14 times, versus 6.11 times at the end of the second quarter of Fiscal 2023
“Our Water Solutions segment continues to outperform, so we are increasing our Fiscal 2024 Adjusted EBITDA(2) guidance for this segment to $500 million plus. The significant reduction in total leverage should provide the financial flexibility to deal with our capital structure. Currently, we are reducing indebtedness on our ABL Facility, rather than the 2025 unsecured notes, as it is our highest cost of debt. We will continue to utilize operational free cash flow, reduced working capital, and asset sale proceeds to further improve the balance sheet. We are reaffirming our full year consolidated Adjusted EBITDA(2) guidance of $645 million plus rather than increasing it commensurate with the Water Solutions’ increase as we are anticipating asset sales plus uncertainty around the Liquid Logistics segment’s performance in the face of a potentially warmer than normal winter.” stated Mike Krimbill NGL’s CEO.
| (1) See the “Non-GAAP Financial Measures” section of this release for the definition of Adjusted EBITDA (as used herein) and a discussion of this non-GAAP financial measure. | |||
| (2) Certain of the forward-looking financial measures are provided on a non-GAAP basis. A reconciliation of forward-looking financial measures to the most directly comparable financial measures calculated and presented in accordance with GAAP is potentially misleading and not practical given the difficulty of projecting event driven transactional and other non-core operating items in any future period. The magnitude of these items, however, may be significant. | |||
Quarterly Results of Operations
The following table summarizes operating income (loss) and Adjusted EBITDA(1) by reportable segment for the periods indicated:
| Quarter Ended | ||||||||||||||||
| September 30, 2023 | September 30, 2022 | |||||||||||||||
| Operating Income (Loss) | Adjusted EBITDA(1) | Operating Income (Loss) | Adjusted EBITDA(1) | |||||||||||||
| (in thousands) | ||||||||||||||||
| Water Solutions | $ | 59,118 | $ | 140,389 | $ | 47,128 | $ | 104,774 | ||||||||
| Crude Oil Logistics | 14,778 | 30,713 | 32,927 | 32,863 | ||||||||||||
| Liquids Logistics | 23,577 | 17,086 | 1,653 | 16,513 | ||||||||||||
| Corporate and Other | (11,443 | ) | (11,974 | ) | (12,938 | ) | (11,908 | ) | ||||||||
| Total | $ | 86,030 | $ | 176,214 | $ | 68,770 | $ | 142,242 | ||||||||
Water Solutions
Operating income for the Water Solutions segment increased $12.0 million for the quarter ended September 30, 2023, compared to the quarter ended September 30, 2022. The Partnership processed approximately 2.44 million barrels of produced water per day during the quarter ended September 30, 2023, a 7.7% increase when compared to approximately 2.27 million barrels of water per day processed during the quarter ended September 30, 2022. The increase was due primarily to higher produced water volumes processed from contracted customers mainly in the Delaware Basin, increased fees from new contracts entered into during fiscal year 2023 and higher fees charged for interruptible spot volumes. Also, there was an increase in payments made by certain producers for committed volumes not delivered. In addition, during July 2023, we entered into a transaction in which a portion of the total consideration received was allocated to revenue due to the termination of a minimum volume water disposal contract.
Revenues from recovered skim oil, including the impact from realized skim oil hedges, totaled $31.1 million for the quarter ended September 30, 2023, an increase of $6.9 million from the prior year period. The increase was due primarily to greater skim oil barrels sold as a result of higher skim oil recovered from increased produced water processed, and the sale during the current quarter of approximately 53,000 barrels of skim oil that were stored at the end of the prior quarter due to tighter pipeline specifications.
Operating expenses in the Water Solutions segment decreased $1.7 million for the quarter ended September 30, 2023, compared to the quarter ended September 30, 2022 due primarily to lower chemical expense and lower severance taxes as a result of a severance tax refund in September 2023 related to prior periods. Operating expense per produced barrel processed was $0.24 for the quarter ended September 30, 2023, compared to $0.27 in the comparative quarter last year.
Crude Oil Logistics
Operating income for the Crude Oil Logistics segment decreased $18.1 million for the quarter ended September 30, 2023, compared to the quarter ended September 30, 2022. The decrease was primarily due to net losses on derivative contracts of $15.4 million compared to net gains in the prior year of $27.8 million. Product margin for crude oil sales increased due to the selling of lower priced inventory into a rising price market. The decrease in operating income was offset by a decrease in expenses of $5.3 million primarily related to the sale of our marine assets on March 30, 2023. During the quarter ended September 30, 2023, physical volumes on the Grand Mesa Pipeline averaged approximately 70,000 barrels per day, compared to approximately 72,000 barrels per day for the quarter ended September 30, 2022.
Liquids Logistics
Operating income for the Liquids Logistics segment increased by $21.9 million for the quarter ended September 30, 2023, compared to the quarter ended September 30, 2022. The increase was primarily due to increased product margins (excluding the impact of derivatives) for propane and butane, offset by lower product margins for refined and other products. Propane margins increased due to our selling lower priced inventory into a market with rising prices. Butane product margins increased due to higher demand for butane blending for the quarter ended September 30, 2023. Margins for refined products declined as the supply issues in certain regions, resulting in higher margins, were resolved and supply and demand were more in balance. Margins for certain other products decreased due to an increase in supply in the market as the final renewable fuel standards mandate released by the EPA lowered the required amount of biodiesel required for blending. In addition, derivative gains increased by approximately $3.4 million and the sale of two propane terminals in July 2023 netted a gain of approximately $6.9 million.
Corporate and Other
The operating loss for Corporate and Other was lower by $1.5 million for the quarter ended September 30, 2023, compared to the quarter ended September 30, 2022. Results for the current period include gains from derivatives of $3.4 million as we have entered into economic hedges to protect our liquidity positions and leverage from a significant increase in commodity prices. These positions will expire between November 2023 and March 2024. The gains were partially offset by an increase in business insurance and legal expenses.
Capitalization and Liquidity
Total liquidity (cash plus available capacity on our asset-based revolving credit facility (“ABL Facility”)) was approximately $307.7 million as of September 30, 2023. Borrowings on the Partnership’s ABL Facility totaled approximately $156.0 million. The increase from March 31, 2023 was primarily due to increases in working capital balances driven by increased inventory volumes and higher net account receivable balances.
The Partnership is in compliance with all of its debt covenants and has no significant debt maturities before March 2025.
Second Quarter Conference Call Information
A conference call to discuss NGL’s results of operations is scheduled for 4:00 pm Central Time on Thursday, November 9, 2023. Analysts, investors, and other interested parties may join the webcast via the event link: https://www.webcaster4.com/Webcast/Page/2808/49346 or by dialing (877) 545-0320 and providing access code: 476458. An archived audio replay of the call will be available for 14 days, which can be accessed by dialing (877) 481-4010 and providing replay passcode 49346.
Upcoming Events
Brad Cooper, NGL Energy Partners CFO, and other members of the management team will be attending the Bank of America Leverage Finance/Credit Conference in Boca Raton, FL on November 28, 2023 and the Wells Fargo Annual Midstream and Utilities Symposium in New York City, NY on December 6, 2023.
Non-GAAP Financial Measures
NGL defines EBITDA as net income (loss) attributable to NGL Energy Partners LP, plus interest expense, income tax expense (benefit), and depreciation and amortization expense. NGL defines Adjusted EBITDA as EBITDA excluding net unrealized gains and losses on derivatives, lower of cost or net realizable value adjustments, gains and losses on disposal or impairment of assets, gains and losses on early extinguishment of liabilities, equity-based compensation expense, acquisition expense, revaluation of liabilities, certain legal settlements and other. NGL also includes in Adjusted EBITDA certain inventory valuation adjustments related to certain refined products businesses within NGL’s Liquids Logistics segment as discussed below. EBITDA and Adjusted EBITDA should not be considered as alternatives to net income, income before income taxes, cash flows from operating activities, or any other measure of financial performance calculated in accordance with GAAP, as those items are used to measure operating performance, liquidity or the ability to service debt obligations. NGL believes that EBITDA provides additional information to investors for evaluating NGL’s ability to make quarterly distributions to NGL’s unitholders and is presented solely as a supplemental measure. NGL believes that Adjusted EBITDA provides additional information to investors for evaluating NGL’s financial performance without regard to NGL’s financing methods, capital structure and historical cost basis. Further, EBITDA and Adjusted EBITDA, as NGL defines them, may not be comparable to EBITDA, Adjusted EBITDA, or similarly titled measures used by other entities.
Other than for certain businesses within NGL’s Liquids Logistics segment, for purposes of the Adjusted EBITDA calculation, NGL makes a distinction between realized and unrealized gains and losses on derivatives. During the period when a derivative contract is open, NGL records changes in the fair value of the derivative as an unrealized gain or loss. When a derivative contract matures or is settled, NGL reverses the previously recorded unrealized gain or loss and records a realized gain or loss. NGL does not draw such a distinction between realized and unrealized gains and losses on derivatives of certain businesses within NGL’s Liquids Logistics segment. The primary hedging strategy of these businesses is to hedge against the risk of declines in the value of inventory over the course of the contract cycle, and many of the hedges cover extended periods of time. The “inventory valuation adjustment” row in the reconciliation table reflects the difference between the market value of the inventory of these businesses at the balance sheet date and its cost. NGL includes this in Adjusted EBITDA because the unrealized gains and losses associated with derivative contracts associated with the inventory of this segment, which are intended primarily to hedge inventory holding risk and are included in net income, also affect Adjusted EBITDA. In NGL’s Crude Oil Logistics segment, they purchase certain crude oil barrels using the West Texas Intermediate (“WTI”) calendar month average (“CMA”) price and sell the crude oil barrels using the WTI CMA price plus the Argus CMA Differential Roll Component (“CMA Differential Roll”) per NGL’s contracts. To eliminate the volatility of the CMA Differential Roll, NGL entered into derivative instrument positions in January 2021 to secure a margin of approximately $0.20 per barrel on 1.5 million barrels per month from May 2021 through December 2023. Due to the nature of these positions, the cash flow and earnings recognized on a GAAP basis will differ from period to period depending on the current crude oil price and future estimated crude oil price which are valued utilizing third-party market quoted prices. NGL is recognizing in Adjusted EBITDA the gains and losses from the derivative instrument positions entered into in January 2021 to properly align with the physical margin NGL is hedging each month through the term of this transaction. This representation aligns with management’s evaluation of the transaction.
Distributable Cash Flow is defined as Adjusted EBITDA minus maintenance capital expenditures, income tax expense, cash interest expense, preferred unit distributions and other. Maintenance capital expenditures represent capital expenditures necessary to maintain the Partnership’s operating capacity. For the CMA Differential Roll transaction, as discussed above, we have included an adjustment to Distributable Cash Flow to reflect, in the period for which they relate, the actual cash flows for the positions that settled that are not being recognized in Adjusted EBITDA. Distributable Cash Flow is a performance metric used by senior management to compare cash flows generated by the Partnership (excluding growth capital expenditures and prior to the establishment of any retained cash reserves by the Board of Directors) to the cash distributions expected to be paid to unitholders. Using this metric, management can quickly compute the coverage ratio of estimated cash flows to planned cash distributions. This financial measure also is important to investors as an indicator of whether the Partnership is generating cash flow at a level that can sustain, or support an increase in, quarterly distribution rates. Actual distribution amounts are set by the Board of Directors.
We do not provide a reconciliation for non-GAAP estimates on a forward-looking basis where we are unable to provide a meaningful calculation or estimation of reconciling items and the information is not available without unreasonable effort. This is due to the inherent difficulty of forecasting the timing or amount of various items that would impact the most directly comparable forward-looking U.S. GAAP financial measure that have not yet occurred, are out of the Partnership’s control and/or cannot be reasonably predicted. Forward-looking non-GAAP financial measures provided without the most directly comparable U.S. GAAP financial measures may vary materially from the corresponding U.S. GAAP financial measures.
Forward-Looking Statements
This press release includes “forward-looking statements.” All statements other than statements of historical facts included or incorporated herein may constitute forward-looking statements. Actual results could vary significantly from those expressed or implied in such statements and are subject to a number of risks and uncertainties. While NGL believes such forward-looking statements are reasonable, NGL cannot assure they will prove to be correct. The forward-looking statements involve risks and uncertainties that affect operations, financial performance, and other factors as discussed in filings with the Securities and Exchange Commission. Other factors that could impact any forward-looking statements are those risks described in NGL’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and other public filings. You are urged to carefully review and consider the cautionary statements and other disclosures made in those filings, specifically those under the heading “Risk Factors.” NGL undertakes no obligation to publicly update or revise any forward-looking statements except as required by law.
NGL provides Adjusted EBITDA guidance that does not include certain charges and costs, which in future periods are generally expected to be similar to the kinds of charges and costs excluded from Adjusted EBITDA in prior periods, such as income taxes, interest and other non-operating items, depreciation and amortization, net unrealized gains and losses on derivatives, lower of cost or net realizable value adjustments, gains and losses on disposal or impairment of assets, gains and losses on early extinguishment of liabilities, equity-based compensation expense, acquisition expense, revaluation of liabilities and items that are unusual in nature or infrequently occurring. The exclusion of these charges and costs in future periods will have a significant impact on the Partnership’s Adjusted EBITDA, and the Partnership is not able to provide a reconciliation of its Adjusted EBITDA guidance to net income (loss) without unreasonable efforts due to the uncertainty and variability of the nature and amount of these future charges and costs and the Partnership believes that such reconciliation, if possible, would imply a degree of precision that would be potentially confusing or misleading to investors.
About NGL Energy Partners LP
NGL Energy Partners LP, a Delaware limited partnership, is a diversified midstream energy company that transports, stores, markets and provides other logistics services for crude oil, natural gas liquids and other products and transports, treats and disposes of produced water generated as part of the oil and natural gas production process.
For further information, visit the Partnership’s website at www.nglenergypartners.com.
| NGL ENERGY PARTNERS LP AND SUBSIDIARIESUnaudited Condensed Consolidated Balance Sheets(in Thousands, except unit amounts) | |||||||
| September 30, 2023 | March 31, 2023 | ||||||
| ASSETS | |||||||
| CURRENT ASSETS: | |||||||
| Cash and cash equivalents | $ | 2,680 | $ | 5,431 | |||
| Accounts receivable-trade, net of allowance for expected credit losses of $1,840 and $1,964, respectively | 1,157,710 | 1,033,956 | |||||
| Accounts receivable-affiliates | 15,035 | 12,362 | |||||
| Inventories | 250,572 | 142,607 | |||||
| Prepaid expenses and other current assets | 137,585 | 98,089 | |||||
| Total current assets | 1,563,582 | 1,292,445 | |||||
| PROPERTY, PLANT AND EQUIPMENT, net of accumulated depreciation of $908,595 and $898,184, respectively | 2,166,103 | 2,223,380 | |||||
| GOODWILL | 707,583 | 712,364 | |||||
| INTANGIBLE ASSETS, net of accumulated amortization of $406,653 and $580,860, respectively | 1,016,820 | 1,058,668 | |||||
| INVESTMENTS IN UNCONSOLIDATED ENTITIES | 20,900 | 21,090 | |||||
| OPERATING LEASE RIGHT-OF-USE ASSETS | 95,231 | 90,220 | |||||
| OTHER NONCURRENT ASSETS | 57,696 | 57,977 | |||||
| Total assets | $ | 5,627,915 | $ | 5,456,144 | |||
| LIABILITIES AND EQUITY | |||||||
| CURRENT LIABILITIES: | |||||||
| Accounts payable-trade | $ | 1,080,673 | $ | 927,591 | |||
| Accounts payable-affiliates | 44 | 65 | |||||
| Accrued expenses and other payables | 164,115 | 133,616 | |||||
| Advance payments received from customers | 29,239 | 14,699 | |||||
| Operating lease obligations | 33,376 | 34,166 | |||||
| Total current liabilities | 1,307,447 | 1,110,137 | |||||
| LONG-TERM DEBT, net of debt issuance costs of $24,385 and $30,117, respectively | 2,782,262 | 2,857,805 | |||||
| OPERATING LEASE OBLIGATIONS | 63,975 | 58,450 | |||||
| OTHER NONCURRENT LIABILITIES | 107,945 | 111,226 | |||||
| CLASS D 9.00% PREFERRED UNITS, 600,000 and 600,000 preferred units issued and outstanding, respectively | 551,097 | 551,097 | |||||
| EQUITY: | |||||||
| General partner, representing a 0.1% interest, 132,059 and 132,059 notional units, respectively | (52,572 | ) | (52,551 | ) | |||
| Limited partners, representing a 99.9% interest, 131,927,343 and 131,927,343 common units issued and outstanding, respectively | 503,798 | 455,564 | |||||
| Class B preferred limited partners, 12,585,642 and 12,585,642 preferred units issued and outstanding, respectively | 305,468 | 305,468 | |||||
| Class C preferred limited partners, 1,800,000 and 1,800,000 preferred units issued and outstanding, respectively | 42,891 | 42,891 | |||||
| Accumulated other comprehensive loss | (473 | ) | (450 | ) | |||
| Noncontrolling interests | 16,077 | 16,507 | |||||
| Total equity | 815,189 | 767,429 | |||||
| Total liabilities and equity | $ | 5,627,915 | $ | 5,456,144 | |||
| NGL ENERGY PARTNERS LP AND SUBSIDIARIESUnaudited Condensed Consolidated Statements of Operations(in Thousands, except unit and per unit amounts) | ||||||||||||||||
| Three Months Ended September 30, | Six Months Ended September 30, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| REVENUES: | ||||||||||||||||
| Water Solutions | $ | 197,244 | $ | 164,910 | $ | 378,546 | $ | 330,989 | ||||||||
| Crude Oil Logistics | 489,713 | 574,783 | 954,103 | 1,440,154 | ||||||||||||
| Liquids Logistics | 1,154,139 | 1,269,754 | 2,124,551 | 2,735,687 | ||||||||||||
| Total Revenues | 1,841,096 | 2,009,447 | 3,457,200 | 4,506,830 | ||||||||||||
| COST OF SALES: | ||||||||||||||||
| Water Solutions | 7,424 | 920 | 9,993 | 11,145 | ||||||||||||
| Crude Oil Logistics | 454,927 | 514,199 | 880,226 | 1,336,569 | ||||||||||||
| Liquids Logistics | 1,119,478 | 1,249,001 | 2,066,725 | 2,671,417 | ||||||||||||
| Corporate and Other | (3,381 | ) | — | 833 | — | |||||||||||
| Total Cost of Sales | 1,578,448 | 1,764,120 | 2,957,777 | 4,019,131 | ||||||||||||
| OPERATING COSTS AND EXPENSES: | ||||||||||||||||
| Operating | 77,389 | 84,158 | 154,070 | 156,018 | ||||||||||||
| General and administrative | 17,496 | 16,628 | 37,787 | 33,385 | ||||||||||||
| Depreciation and amortization | 65,526 | 68,118 | 134,505 | 134,778 | ||||||||||||
| Loss on disposal or impairment of assets, net | 16,207 | 7,653 | 15,011 | 7,485 | ||||||||||||
| Operating Income | 86,030 | 68,770 | 158,050 | 156,033 | ||||||||||||
| OTHER INCOME (EXPENSE): | ||||||||||||||||
| Equity in earnings of unconsolidated entities | 851 | 1,207 | 942 | 1,881 | ||||||||||||
| Interest expense | (58,627 | ) | (68,297 | ) | (118,149 | ) | (135,608 | ) | ||||||||
| Gain on early extinguishment of liabilities, net | 63 | 2,479 | 6,871 | 4,141 | ||||||||||||
| Other income (expense), net | 310 | (15 | ) | 616 | 631 | |||||||||||
| Income Before Income Taxes | 28,627 | 4,144 | 48,330 | 27,078 | ||||||||||||
| INCOME TAX EXPENSE | (342 | ) | (537 | ) | (482 | ) | (365 | ) | ||||||||
| Net Income | 28,285 | 3,607 | 47,848 | 26,713 | ||||||||||||
| LESS: NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS | (257 | ) | (97 | ) | (519 | ) | (342 | ) | ||||||||
| NET INCOME ATTRIBUTABLE TO NGL ENERGY PARTNERS LP | $ | 28,028 | $ | 3,510 | $ | 47,329 | $ | 26,371 | ||||||||
| NET LOSS ALLOCATED TO COMMON UNITHOLDERS | $ | (6,709 | ) | $ | (26,899 | ) | $ | (21,191 | ) | $ | (31,578 | ) | ||||
| BASIC AND DILUTED LOSS PER COMMON UNIT | $ | (0.05 | ) | $ | (0.21 | ) | $ | (0.16 | ) | $ | (0.24 | ) | ||||
| BASIC WEIGHTED AVERAGE COMMON UNITS OUTSTANDING | 131,927,343 | 130,695,970 | 131,927,343 | 130,695,970 | ||||||||||||
| DILUTED WEIGHTED AVERAGE COMMON UNITS OUTSTANDING | 131,927,343 | 130,695,970 | 131,927,343 | 130,695,970 | ||||||||||||
| EBITDA, ADJUSTED EBITDA AND DISTRIBUTABLE CASH FLOW RECONCILIATION(Unaudited) | ||||||||||||||||
| The following table reconciles NGL’s net income to NGL’s EBITDA, Adjusted EBITDA and Distributable Cash Flow for the periods indicated: | ||||||||||||||||
| Three Months Ended September 30, | Six Months Ended September 30, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| (in thousands) | ||||||||||||||||
| Net income | $ | 28,285 | $ | 3,607 | $ | 47,848 | $ | 26,713 | ||||||||
| Less: Net income attributable to noncontrolling interests | (257 | ) | (97 | ) | (519 | ) | (342 | ) | ||||||||
| Net income attributable to NGL Energy Partners LP | 28,028 | 3,510 | 47,329 | 26,371 | ||||||||||||
| Interest expense | 58,642 | 68,313 | 118,178 | 135,639 | ||||||||||||
| Income tax expense | 342 | 537 | 482 | 365 | ||||||||||||
| Depreciation and amortization | 65,502 | 68,103 | 134,423 | 134,717 | ||||||||||||
| EBITDA | 152,514 | 140,463 | 300,412 | 297,092 | ||||||||||||
| Net unrealized losses (gains) on derivatives | 9,691 | (4,828 | ) | 9,059 | (61,730 | ) | ||||||||||
| CMA Differential Roll net losses (gains) (1) | 2,233 | (6,518 | ) | (6,904 | ) | 28,102 | ||||||||||
| Inventory valuation adjustment (2) | (6,436 | ) | (3,560 | ) | (6,100 | ) | (4,115 | ) | ||||||||
| Lower of cost or net realizable value adjustments | 1,080 | 10,143 | 3,844 | 857 | ||||||||||||
| Loss on disposal or impairment of assets, net | 16,207 | 7,653 | 15,011 | 7,485 | ||||||||||||
| Gain on early extinguishment of liabilities, net | (63 | ) | (2,479 | ) | (6,871 | ) | (4,141 | ) | ||||||||
| Equity-based compensation expense | 410 | 479 | 884 | 976 | ||||||||||||
| Acquisition expense (3) | 42 | — | 47 | — | ||||||||||||
| Other (4) | 536 | 889 | 1,487 | 1,592 | ||||||||||||
| Adjusted EBITDA | $ | 176,214 | $ | 142,242 | $ | 310,869 | $ | 266,118 | ||||||||
| Less: Cash interest expense (5) | 54,483 | 64,096 | 109,894 | 127,221 | ||||||||||||
| Less: Income tax expense | 342 | 537 | 482 | 365 | ||||||||||||
| Less: Maintenance capital expenditures | 16,358 | 14,219 | 32,885 | 29,586 | ||||||||||||
| Less: CMA Differential Roll (6) | (7,352 | ) | (16,274 | ) | (18,047 | ) | 1,934 | |||||||||
| Less: Other (7) | 4 | 77 | 222 | 170 | ||||||||||||
| Distributable Cash Flow | $ | 112,379 | $ | 79,587 | $ | 185,433 | $ | 106,842 | ||||||||
| (1) | Adjustment to align, within Adjusted EBITDA, the net gains and losses of the Partnership’s CMA Differential Roll derivative instruments positions with the physical margin being hedged. See “Non-GAAP Financial Measures” section above for a further discussion. | |
| (2) | Amounts represent the difference between the market value of the inventory at the balance sheet date and its cost. See “Non-GAAP Financial Measures” section above for a further discussion. | |
| (3) | Amounts represent expenses we incurred related to legal and advisory costs associated with acquisitions. | |
| (4) | Amounts represent unrealized gains/losses on marketable securities and accretion expense for asset retirement obligations. Also, the amount for the six months ended September 30, 2022 includes non-cash operating expenses related to our Grand Mesa Pipeline. | |
| (5) | Amounts represent interest expense payable in cash, excluding changes in the accrued interest balance. | |
| (6) | Amount represents the cash portion of the adjustments of the Partnership’s CMA Differential Roll derivative instrument positions, as discussed above, that settled during the period. | |
| (7) | Amounts represents cash paid to settle asset retirement obligations. |
| ADJUSTED EBITDA RECONCILIATION BY SEGMENT | |||||||||||||||||||
| Three Months Ended September 30, 2023 | |||||||||||||||||||
| Water Solutions | Crude Oil Logistics | Liquids Logistics | Corporate and Other | Consolidated | |||||||||||||||
| (in thousands) | |||||||||||||||||||
| Operating income (loss) | $ | 59,118 | $ | 14,778 | $ | 23,577 | $ | (11,443 | ) | $ | 86,030 | ||||||||
| Depreciation and amortization | 52,053 | 9,573 | 2,383 | 1,517 | 65,526 | ||||||||||||||
| Amortization recorded to cost of sales | — | — | 65 | — | 65 | ||||||||||||||
| Net unrealized losses (gains) on derivatives | 4,471 | 4,554 | 3,230 | (2,564 | ) | 9,691 | |||||||||||||
| CMA Differential Roll net losses (gains) | — | 2,233 | — | — | 2,233 | ||||||||||||||
| Inventory valuation adjustment | — | — | (6,436 | ) | — | (6,436 | ) | ||||||||||||
| Lower of cost or net realizable value adjustments | — | — | 1,080 | — | 1,080 | ||||||||||||||
| Loss (gain) on disposal or impairment of assets, net | 23,599 | (467 | ) | (6,925 | ) | — | 16,207 | ||||||||||||
| Equity-based compensation expense | — | — | — | 410 | 410 | ||||||||||||||
| Acquisition expense | (29 | ) | — | 65 | 6 | 42 | |||||||||||||
| Other income (expense), net | 248 | (1 | ) | 14 | 49 | 310 | |||||||||||||
| Adjusted EBITDA attributable to unconsolidated entities | 1,032 | — | (21 | ) | 51 | 1,062 | |||||||||||||
| Adjusted EBITDA attributable to noncontrolling interest | (542 | ) | — | — | — | (542 | ) | ||||||||||||
| Other | 439 | 43 | 54 | — | 536 | ||||||||||||||
| Adjusted EBITDA | $ | 140,389 | $ | 30,713 | $ | 17,086 | $ | (11,974 | ) | $ | 176,214 | ||||||||
| Three Months Ended September 30, 2022 | |||||||||||||||||||
| Water Solutions | Crude Oil Logistics | Liquids Logistics | Corporate and Other | Consolidated | |||||||||||||||
| (in thousands) | |||||||||||||||||||
| Operating income (loss) | $ | 47,128 | $ | 32,927 | $ | 1,653 | $ | (12,938 | ) | $ | 68,770 | ||||||||
| Depreciation and amortization | 51,327 | 11,775 | 3,396 | 1,620 | 68,118 | ||||||||||||||
| Amortization recorded to cost of sales | — | — | 69 | — | 69 | ||||||||||||||
| Net unrealized (gains) losses on derivatives | (4,340 | ) | (4,575 | ) | 4,087 | — | (4,828 | ) | |||||||||||
| CMA Differential Roll net losses (gains) | — | (6,518 | ) | — | — | (6,518 | ) | ||||||||||||
| Inventory valuation adjustment | — | — | (3,560 | ) | — | (3,560 | ) | ||||||||||||
| Lower of cost or net realizable value adjustments | — | (493 | ) | 10,636 | — | 10,143 | |||||||||||||
| Loss (gain) on disposal or impairment of assets, net | 9,035 | (296 | ) | 52 | (1,138 | ) | 7,653 | ||||||||||||
| Equity-based compensation expense | — | — | — | 479 | 479 | ||||||||||||||
| Other (expense) income, net | (251 | ) | 303 | (91 | ) | 24 | (15 | ) | |||||||||||
| Adjusted EBITDA attributable to unconsolidated entities | 1,387 | — | (17 | ) | 45 | 1,415 | |||||||||||||
| Adjusted EBITDA attributable to noncontrolling interest | (373 | ) | — | — | — | (373 | ) | ||||||||||||
| Other | 861 | (260 | ) | 288 | — | 889 | |||||||||||||
| Adjusted EBITDA | $ | 104,774 | $ | 32,863 | $ | 16,513 | $ | (11,908 | ) | $ | 142,242 | ||||||||
| Six Months Ended September 30, 2023 | |||||||||||||||||||
| Water Solutions | Crude Oil Logistics | Liquids Logistics | Corporate and Other | Consolidated | |||||||||||||||
| (in thousands) | |||||||||||||||||||
| Operating income (loss) | $ | 128,449 | $ | 31,785 | $ | 31,408 | $ | (33,592 | ) | $ | 158,050 | ||||||||
| Depreciation and amortization | 106,476 | 19,319 | 5,597 | 3,113 | 134,505 | ||||||||||||||
| Amortization recorded to cost of sales | — | — | 130 | — | 130 | ||||||||||||||
| Net unrealized losses (gains) on derivatives | 4,471 | 9,689 | (5,489 | ) | 388 | 9,059 | |||||||||||||
| CMA Differential Roll net losses (gains) | — | (6,904 | ) | — | — | (6,904 | ) | ||||||||||||
| Inventory valuation adjustment | — | — | (6,100 | ) | — | (6,100 | ) | ||||||||||||
| Lower of cost or net realizable value adjustments | — | — | 3,844 | — | 3,844 | ||||||||||||||
| Loss (gain) on disposal or impairment of assets, net | 22,318 | 429 | (7,736 | ) | — | 15,011 | |||||||||||||
| Equity-based compensation expense | — | — | — | 884 | 884 | ||||||||||||||
| Acquisition expense | (28 | ) | — | 84 | (9 | ) | 47 | ||||||||||||
| Other income, net | 428 | 105 | 15 | 68 | 616 | ||||||||||||||
| Adjusted EBITDA attributable to unconsolidated entities | 1,259 | — | (26 | ) | 95 | 1,328 | |||||||||||||
| Adjusted EBITDA attributable to noncontrolling interest | (1,088 | ) | — | — | — | (1,088 | ) | ||||||||||||
| Other | 1,298 | 81 | 108 | — | 1,487 | ||||||||||||||
| Adjusted EBITDA | $ | 263,583 | $ | 54,504 | $ | 21,835 | $ | (29,053 | ) | $ | 310,869 | ||||||||
| Six Months Ended September 30, 2022 | |||||||||||||||||||
| Water Solutions | Crude Oil Logistics | Liquids Logistics | Corporate and Other | Consolidated | |||||||||||||||
| (in thousands) | |||||||||||||||||||
| Operating income (loss) | $ | 100,733 | $ | 51,916 | $ | 28,293 | $ | (24,909 | ) | $ | 156,033 | ||||||||
| Depreciation and amortization | 101,175 | 23,529 | 6,777 | 3,297 | 134,778 | ||||||||||||||
| Amortization recorded to cost of sales | — | — | 137 | — | 137 | ||||||||||||||
| Net unrealized gains on derivatives | (4,464 | ) | (55,580 | ) | (1,686 | ) | — | (61,730 | ) | ||||||||||
| CMA Differential Roll net losses (gains) | — | 28,102 | — | — | 28,102 | ||||||||||||||
| Inventory valuation adjustment | — | — | (4,115 | ) | — | (4,115 | ) | ||||||||||||
| Lower of cost or net realizable value adjustments | — | 1,074 | (217 | ) | — | 857 | |||||||||||||
| Loss (gain) on disposal or impairment of assets, net | 9,976 | (1,556 | ) | 52 | (987 | ) | 7,485 | ||||||||||||
| Equity-based compensation expense | — | — | — | 976 | 976 | ||||||||||||||
| Other income (expense), net | 8 | 331 | (184 | ) | 476 | 631 | |||||||||||||
| Adjusted EBITDA attributable to unconsolidated entities | 2,212 | — | (24 | ) | 89 | 2,277 | |||||||||||||
| Adjusted EBITDA attributable to noncontrolling interest | (905 | ) | — | — | — | (905 | ) | ||||||||||||
| Other | 1,086 | 125 | 381 | — | 1,592 | ||||||||||||||
| Adjusted EBITDA | $ | 209,821 | $ | 47,941 | $ | 29,414 | $ | (21,058 | ) | $ | 266,118 | ||||||||
| OPERATIONAL DATA(Unaudited) | |||||||
| Three Months Ended | Six Months Ended | ||||||
| September 30, | September 30, | ||||||
| 2023 | 2022 | 2023 | 2022 | ||||
| (in thousands, except per day amounts) | |||||||
| Water Solutions: | |||||||
| Produced water processed (barrels per day) | |||||||
| Delaware Basin | 2,156,733 | 1,986,585 | 2,154,906 | 1,937,179 | |||
| Eagle Ford Basin | 138,509 | 112,337 | 135,737 | 105,463 | |||
| DJ Basin | 146,124 | 153,766 | 157,745 | 152,057 | |||
| Other Basins | — | 13,150 | 1,481 | 15,505 | |||
| Total | 2,441,366 | 2,265,838 | 2,449,869 | 2,210,204 | |||
| Recycled water (barrels per day) | 35,341 | 93,898 | 67,213 | 115,294 | |||
| Total (barrels per day) | 2,476,707 | 2,359,736 | 2,517,082 | 2,325,498 | |||
| Skim oil sold (barrels per day) | 4,378 | 3,216 | 4,046 | 3,584 | |||
| Crude Oil Logistics: | |||||||
| Crude oil sold (barrels) | 5,636 | 5,839 | 11,643 | 13,473 | |||
| Crude oil transported on owned pipelines (barrels) | 6,484 | 6,600 | 13,047 | 13,770 | |||
| Crude oil storage capacity – owned and leased (barrels) (1) | 5,232 | 5,232 | |||||
| Crude oil inventory (barrels) (1) | 660 | 660 | |||||
| Liquids Logistics: | |||||||
| Refined products sold (gallons) | 209,919 | 186,031 | 430,006 | 374,657 | |||
| Propane sold (gallons) | 129,988 | 169,775 | 269,741 | 334,619 | |||
| Butane sold (gallons) | 108,085 | 111,551 | 186,574 | 232,076 | |||
| Other products sold (gallons) | 100,389 | 104,979 | 191,488 | 198,616 | |||
| Natural gas liquids and refined products storage capacity – owned and leased (gallons) (1) | 157,589 | 167,559 | |||||
| Refined products inventory (gallons) (1) | 707 | 1,990 | |||||
| Propane inventory (gallons) (1) | 115,491 | 101,880 | |||||
| Butane inventory (gallons) (1) | 92,651 | 84,928 | |||||
| Other products inventory (gallons) (1) | 18,012 | 33,653 | |||||
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